Anacostia Waterfront Presentation
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Transcript of Anacostia Waterfront Presentation
www.theanacostiawaterfront.com
Economics of Developingthe Anacostia River
Nina Albert, Project ManagerOffice of the Deputy Mayor for Planning and Economic Development
March 17, 2009, 6:30-8:30pmMartin Luther King Library
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Agenda
• Economic development principles
• Sources and uses of funds
• Public financing methods
[Short break for questions]
• Land Disposition
• Real estate development process
• Real estate finance 101
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Anacostia Waterfront today
• 2,800 acres of land
• 95% publicly-owned shoreline
• 70% publicly-owned land
– National Park Services owns 1,200 acres (42% total)
• Demographics
– Total population 43,348
– Total households 19,585
– Median income $29,771
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Anacostia ProjectsLand OwnershipDistrict of Columbia
Water and Sewer Authority
National Park Service
US Army Corps of Engineers
US Military
Private
Projects take a long time because:• Coordination with Feds• Public funding is limited
• Public funding is complex• Many moving pieces
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AWI Projects
Types of Project Agency Name of Projects
Infrastructure DDOTWASADMPED
• South Capital Street Bridge• 11th
Street Bridge• Anacostia Riverwalk Trail• Low‐Impact Development Streetscape Standards• Bulkhead replacement• Dredging• Combined sewer system rehabilitation/replacement
Environmental Remediation DDOEUSACEPrivate parties
• Wetland restoration• Tributary system upgrades• Remediation of hot spots• Dredging out contaminated silt in Anacostia River• “Mystery Mountain”
Redevelopment Projects DMPEDPrivate
developers
• Southwest Waterfront• Hill East Waterfront• Poplar Point• The Yards
Parks DPRDMPEDNPS
• Kingman Island restoration• Marvin Gaye Park• Diamond Teague Park• Poplar Point• Parks at the Yards• Canal Park• Boathouse Row (kind of)
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Estimated Public Investment over25‐30 yrs
• Environment $2 billion
• Transportation $4 billion
• Parks $250 million
• Cultural destinations $100 million
• Neighborhoods $300 million
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Sources and Uses of Funds
30+ yrs
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Timing of Use of Funds
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
COST GENERATORSEnvironmental remediation
Bulkhead replacement
CSO replacement
Parks
Transportation projects
Dredging
REVENUE GENERATORSSouthwest Waterfront
Poplar Point
Hill East
DOT PILOT
Other redevelopment
30 year horizon
Need to spend money on infrastructure for redevelopment to occur
Redevelopment to occur in phases and start generating revenue Stabilized revenues
Try to time revenue generators as strategically as possible
** Did not include costs ofprivate costs of development
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Timing of investments
DC cannot assume debt level greater than 17% of revenues
DEBT
REVENUES
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Types of Public Funding
• Direct allocation
• Government Obligation bonds (G.O. bonds)
– “Cheapest” way to borrow money
• Tax Increment bonds
– Payment In Lieu of Taxes (PILOT)
– Tax Increment Financing (TIF)
– Want to make these tax-exempt
Bond issuanceOr
Bond proceeds
BondissuerBondissuer
BondbuyerBondbuyer
DC tax
revenues
DC projects
Future payments w/ interest
Money today
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DOT PILOT
• Property was owned by Federal government• Once transferred to private owner, property is no
longer tax-exempt; now has property tax on it• Previous tax revenues = $0• $110 million generated for AWI specific uses
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Southwest WaterfrontS OUTHWE S T WATERF RONT
TIF /P IL OT Bond Tax Revenue and Debt S ervice S ummary
$‐
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
$100,000,000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47
T IF /P IL OT Period
E xis ting Tax Base ‐E scalated
P rojected New TaxR evenue
P rojected DebtS ervice
Phase 1A
hase 1
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District Economic Goals
• Tax revenue increases (property, sales, income)• Job creation
– People are employed, have healthcare, discretionary income, housing– DC’s cost for support services (housing, healthcare, other) decreases– DC’s income taxes increase
• Business creation– Creates employment opportunities– DC’s revenue from sales and business taxes increases
• Catalytic effects– Encourages adjacent properties to redevelop or increase productivity
• Housing opportunities– DC has goal of remaining a residential city, with a range of homeownership opportunities
Cannot overlook
environmental
or social equity
goals
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[BREATHER]
Time for a few questions Alex Nyhan, Forest City Washington
Dennis Chestnut, Groundwork Anacostia River DC
Nina Albert, Office of the Deputy Mayor for Planning and Economic Development
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Real Estate Development 101
Public‐Private Partnerships
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$9 billion
in private investment
Waterfront StationForest City/Vornado
Southwest WaterfrontHoffman/Struever
The YardsForest City
Poplar PointTBD
Hill EastTBD
Half StreetMonument Realty
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Development process
Land acquisitionand
feasibility
Financing
Schematic Design Construction Drawing
Construction
Completed Project
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How much is the land worth?
RESIDUAL LAND VALUE
Highest
and best
use value
Example:$200M
Environmental
remediation
$20M
Affordable
housing
$45M
Infrastructure $15M
Residual
Land Value
$120M
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1 2 3 4 5 9 10REVENUES VacancyCondos 8% 3,375,000 4,725,000 7,161,075 Apartments 5% 67,000 93,800 139,104 Office 8% 3,000,000 4,200,000 6,031,853 Retail 15% 800,000 1,120,000 1,486,109 Parking 5% 40,000 56,000 83,047
TOTAL REVENUES 7,282,000 10,194,800 14,901,188 186,264,852
COSTSLand cost 15,000,000 Hard cost 37,066,667 37,066,667 37,066,667 Soft cost 7,413,333 7,413,333 7,413,333 Contingency 5,560,000 5,560,000 5,560,000
DEVELOPMENT COSTS 65,040,000 50,040,000 50,040,000 ‐ ‐ ‐ ‐
Financing 3,823,820 3,823,820 3,823,820
TOTAL NOI (68,863,820) (53,863,820) (53,863,820) 7,282,000 10,194,800 14,901,188 186,264,852
IRR 6%
Year
Real Estate Feasibility
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Time
Equity financing
Speculative period (entitlement risk)
Construction loan(debt financing)
Construction risk(time and cost)
Permanent loan(debt financing)
Sales risk(“market” risk)
Development Cost & Risk
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DC Disposition of Land
What is a “disposition”?• Lease greater than 20 years• Sale of property
1)
Southwest Waterfront (23 acres)2)
Hill East (67 acres)3)
Poplar Point (60 acres)
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Project Requirements
AWI Requirements
• 30% affordable housing
• 35% contracting with CBEs; CBE equity
participation; and CBE development
• First Source hiring
(51% from DC; 20% from Ward 8)
• Green building requirements
• Build according to the city’s plans
District’s Goals
• Achieve the AWI requirements
• Create high quality development
• Program the site as to maximize future
revenues
• Developer to pay for as much of the
infrastructure as is economically feasible
• District to receive as much in payment as
possible
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Criteria for Selection
• Experience in developing large-scale development
• Experience developing waterfront projects
• Financial capacity
• Ability to achieve District requirements
• High quality design
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AWI projects are very …
• Unknown costs
• Added public requirements
– Affordable housing
– Cost of parks
– Cost of infrastructure
– Limiting contracting sources
– Limiting hiring sources
• Public financing is sometimes required to create the development opportunity
RESIDUAL LAND VALUE
Highest
and best
use value
Example:$200M
Environmental
remediation
$50M
30%
affordable
housing
$55M
Infrastructure $45M
Hiring/contractsHiring/contracts $3M$3MUnclean title $2M
Unknown
factors
Unknown
factors ??
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Public‐Private Partnerships
Role of public partner• Establish vision/plan for area
• Remove title encumbrances
• Provide cross-agency coordination to
simplify entitlement process
• Provide public subsidy, if required
• Provide job training to assist developer in
meeting hiring goals
• Champion the project and assist in
maintaining momentum
Role of private developer• Finance
• Entitle
• Design
• Construct
• Market/sell project
• Meet public requirements
• Maintain project
• Pay taxes
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Role of Community
• Provide input and guidance to planners during Small Area Planning process.
• Review and ask questions about plans during permitting process. Provide specific or
clear recommendations or guidance to developers.
– Occurs before construction drawings b/c developer can still modify plans without having lost
time/money.
• If in favor of the project, assist in providing momentum by supporting, participating, and
championing it.
• If not, speak early and speak clearly as to what you want to see changed.
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THANK YOU! Alex Nyhan, Forest City Washington
Dennis Chestnut, Groundwork Anacostia River DC
Nina Albert, Office of the Deputy Mayor for Planning and Economic Development